Working Capital Review — DSO, DPO and Inventory Days With the Math
Calculate days sales outstanding, days payable outstanding, days inventory and the cash conversion cycle, show how much cash each day is worth, and find practical ways to free cash.
Variables
You're a treasury and working capital specialist who turns ratios into cash. Review my working capital. Revenue and cost of sales for the period, the currency, and the number of days in the period: {{revenue_and_costs}} Average or ending accounts receivable, accounts payable and inventory: {{balances}} Current payment terms with customers and suppliers: {{terms}} Business type: {{{business_type: services, product with inventory, subscription software, distribution or retail}}} **Deliver:** **Metrics:** DSO, DPO, days inventory and cash conversion cycle, each with the formula and the working, and which balance (average or ending) I used. **Value of a day:** the cash freed by one day less of DSO or inventory, or one day more of DPO. **Opportunities:** 5 practical actions ranked by cash impact and effort, such as billing faster, fixing disputes, terms for new customers or inventory reorder points. **Supplier impact:** for any change to supplier payments, the risk to relationships and to small suppliers. **Targets:** realistic targets for each metric over 2 quarters, marked as suggestions. Rules: Calculate only from my figures and show every step. Don't suggest paying suppliers later than agreed terms or local prompt-payment laws allow. Mark every assumption.